JPMorgan Divers Ret US Mid Cp Eq ETF earns a High Process Pillar rating.
The main driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's impressive risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also bolsters the rating. The parent firm's five-year risk-adjusted success ratio of 57% reinforces the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their commendable success ratio suggests that this firm does well for investors and that this fund may benefit from that.
This strategy prefers more value-oriented stocks compared with the average fund in its peer group, the Mid-Cap Blend Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, the managers have consistently had exposure to low-volatility stocks over the past few years, or those whose relative returns look best when the markets are their worst. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. In the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. This strategy has also displayed a tendency to hold more companies with high dividend or buyback yields than peers over recent years. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, this strategy has constantly held more illiquid stocks, evidenced by holdings' low trading volume, resulting in higher liquidity risk exposure than peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In recent months, the strategy also had less Liquidity factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.
The portfolio is overweight in utilities and real estate relative to the category average by 6.3 and 5.2 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and technology, underweight the average by 9.1 and 5.8 percentage points of assets, respectively. The portfolio is composed of 363 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 4.7% of the fund’s assets were concentrated in the top 10 fund holdings, as opposed to the category’s 16.1% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 24% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.